U.S. Commerce Secretary Wilbur Ross: Apple’s earnings miss had nothing to do with U.S.-China trade talks

Commerce Secretary Wilbur Ross sat down with CNBC’s “Squawk Box” to discuss the on-going U.S.-China trade talks, the state of the Chinese economy and the latest news out of Washington.

Secretary Ross also commented on Apple:

I don’t think Apple’s earnings miss had anything to do with the present trade talks. Think about it: There have been no tariffs put on Apple products, so that’s not it… [The trade issue] certainly has hurt the Chinese economy… rate of growth in GDP, heading down. Rate of growth in retail sales, heading down. Rate of growth in capital investment, heading down… I’m neither happy nor guilty, we had expected that this would happen because what is happening is that the movement of foreign companies, including American ones, out of China already began before these tariff discussions… Thin about how little we actually export to them. What this whole trade thing is about is they export several times as much as we export to them. So, what we have at risk is a very small amount, both absolutely and because our economy is bigger than theirs, certainly relatively it’s infinitely smaller…. [China] has a big need to create millions of millions of jobs to hold down social unrest… I think what has changes is that China now understands how dependent they are on us…

I think there’s a very good chance that we will get a reasonable settlement that China can live with, that we can live with and that addresses all of the key issues

Full interview via CNBC:

Direct link to video here.

MacDailyNews Take: As we wrote last August:

The tariffs are not the end game. They are bargaining chips and, due to the trade imbalance, the U.S. has 376 billion more chips with which to play than China ($506B – $130B)… China’s running out of chips already. This initial negotiation phase too shall pass. The end result will be better than the starting point.

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

If you look at our results, our shortfall is over 100% from iPhone and it’s primarily in greater China. And so as we look at what’s going on in China — it’s clear that the economy begins to slow there for the second half. And what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy… I’ve had obviously many, many discussions [with the Trump administration] over the course of many months to be constructed and to give sort of my perspective on trade and the importance of it to the American economy as well. And I feel like I’m — that I’m being listened to in that respect. And so I’m actually encouraged by what I’ve heard most recently coming from the U.S. and from China and hopefully we’ll see some changes.Apple CEO Tim Cook, January 2, 2019

At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006

SEE ALSO:
Advisor to President Trump: Apple’s sales should pick up when U.S.-China strike trade deal – January 3, 2019

18 Comments

  1. History made today by Trump’s commerce secretary. The first time in history that a president from either party has publicly accused the CEO of a major publicly traded company of knowingly lying about its financial performance, a violation of the securities laws and potentially a crime under certain circumstances. Remarkable.

        1. Geez there’s delusion and then there is this guy. Always scary when someone starts off with some base logic and then simply uses it as a mask for increasingly extraordinary claims that bare little grasp upon reality, not unlike Cook actually though the latter is rather more circumspect in his choice of language. It’s like putting the boss of Palm in control of your economy with Ballmer as his assistant. So to paraphrase the message is ‘we are very happy with our policies, very happy indeed’. God save us all.

  2. I was always concerned about the possible SEC probe on Cook’s Apple if they went too far into propaganda and overhyping etc to prop up or sustain stock value when their actual performance was not as good as they say it was. Their recent mea culpa might have escaped the probe but we never know what the SEC has or has not been doing about it. Apple has been some transparency and credibility issues.

      1. Yes surely Cooks comments were not so specific as to exclude the fact that Apple has clearly suffered from the problems in the Chinese economy (and a new anti Apple hostility there) which itself has occurred to great degree because of the Trade war so I am not sure on what (un politically motivated) offence they could be accused of here. Just because this goon wants to illogically claim there apparently is no link for his own motives, hardly makes that a concrete fact or the automatic opinion of others with less jaundiced and one imensional views of trade. Fact is the two arguments he and Cook put forward are not actually mutually exclusive it’s just a guy wanting to obscure the link as much as possible. Of course in China such comments from a government tool would mean Cooks likely arrest or at least a horses head on his pillow, one hopes things haven’t got that low yet in the US.

  3. And it may not be too wise to overly blame China and the Trump Administration as if it was the biggest single issue in the recent disclosure of Apple performance, particularly without any word to blame themselves.

  4. “[The trade issue] certainly has hurt the Chinese economy”

    Uhm, so yeah, he admitted it, the trade talks have hurt the Chinese economy and Apple is collateral damage.

    If you know China, the gov’t news will make out the US to be the bad actor here, and the public will respond by punishing the bad actor by not buying their products. It happens all the time, not just to the US in this case, but to other countries as well, Japan, S Korea, Thailand. Look at what happened to Dolce&Gabbana recently. It doesn’t take much to offend a nation’s sensibilities. If you put Taiwan as a country on your website, when booking a hotel room, they’ll get upset. That’s what you’re dealing with.

    1. I remember the US France tiff over war issues when restaurants even renamed ‘French’ Fries to Freedom Fries.

      Tensions between USA China has to affect Chinese consumer perceptions especially with their limited access to non government influenced media.

      Before the trade war Apple’s growth in China was pretty good even as local and Korean brands took a hit.

      This is what Cook announced in November 2017 “Sales from greater China (which includes Taiwan and Hong Kong) reached $9.8 billion for the quarter, marking an 11.5% increase from the same period a year ago”

      Quartz.com Nov 2 2017
      “Tim Cook attributed the turnaround in China to strong sales for all Apple products, adding that the company scored an “all-time record” for Mac sales in the mainland. “The China rebound was broad based across the products. And so we just had a phenomenal quarter on iPad, on the Mac, on Services, on Apple Watch, on iPhone,” he said.”

      it’s only recently sales went down.

      (btw My brother was an IT manager in Shanghai for a few years and I spent 2 months in Asia last year)

  5. What Commerce Secretary Wilbur Ross (and his opinions endorsed by MacDailyNews editors) are the side effects of tariffs. Although it is true that Apple iPhones are not directly impacted by tariff fees, a “Trade War” between two countries arouses nationalistic emotions. Regarding Apple specifically, numerous reports have been publicized highlighting several Chinese firms enacting new corporate policies that forbid employees from purchasing – or using – Apple iPhones. Indeed, just from my nationalistic perspective, I would purchase an iPhone over a competing Huawei smartphone (if such a phone were available for purchase.) I have NO Doubt that the average Chinese citizen (regardless of economic status) would prefer a Chinese product while China was engaged in a Trade War with the US. I wonder if anyone doubts that reality.

    1. Sorry about that first comment “sentence”. I meant to say, “What Commerce Secretary Wilbur Ross doesn’t mention are the side effects of tariffs. (And by inference, the editors of MacDailyNews fail to mention also)

  6. One of the bigger problems that Apple has with China, which they did not address is the fierce competitions by Chinese smartphone makers. In many cases, even in North America, Chinese made smartphones are making headway into this market. Some of their devices, in my opinion, are superior to iPhones. In some cases, they even solved what Apple could not. Apple is essentially a typical “fabless” operation and there is much dependence on the vendor’s ability to develop and improve component performance, while Huawei etc have been developing their own in-house technologies. Chinese people are great scientific minds but they have been suppressed and oppressed by a single party communist dictatorship in the past century or so. I would not discount the ability by Chinese to compete head-on or even exceed anything Apple is offering now. I am not surprised if they come up with their own mobile OS that may exceed Android that they have been currently using. Sad but I am realistic, and I do not unilaterally discount or dismiss them. Remember Apple has been struggling in the Chinese market for quite some time even before the trade issues erupted recently, so ha Samsung there. BTW, this does not mean I do not support Apple. I do and I will never leave the iPhone. But I have a 2nd line to experiment any other alternatives:-).

  7. “Trade must be fair and no longer a one way street!”

    What the fuck is the senile man-baby even gibbering about. For many years now, the USA has consumed the majority of the world’s resounces – WAY out of proportion to the population. If there is any one-way street, it is INTO the US.

  8. What does the average American think when 1.4 billion Chinese start going voluntarily to pep rallies to chant “CHINA FIRST! CHIYNAAA FIRST!!!!!!”

    An aging high cost market of 330 million people in the process of isolating itself and already shouldering an out of control debt load will not fare well. America needs allies, better education, a balanced budget amendment, and an uncorrupted nonpartisan executive and legislature. Until those things happen, China will continue to steal technology and trade with former USA partners.

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